Correlation Between BHI and Phoenix Materials
Can any of the company-specific risk be diversified away by investing in both BHI and Phoenix Materials at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BHI and Phoenix Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHI Co and Phoenix Materials Co, you can compare the effects of market volatilities on BHI and Phoenix Materials and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BHI with a short position of Phoenix Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHI and Phoenix Materials.
Diversification Opportunities for BHI and Phoenix Materials
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between BHI and Phoenix is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding BHI Co and Phoenix Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Materials and BHI is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BHI Co are associated (or correlated) with Phoenix Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Materials has no effect on the direction of BHI i.e., BHI and Phoenix Materials go up and down completely randomly.
Pair Corralation between BHI and Phoenix Materials
Assuming the 90 days trading horizon BHI Co is expected to generate 1.23 times more return on investment than Phoenix Materials. However, BHI is 1.23 times more volatile than Phoenix Materials Co. It trades about 0.28 of its potential returns per unit of risk. Phoenix Materials Co is currently generating about -0.01 per unit of risk. If you would invest 729,000 in BHI Co on October 31, 2024 and sell it today you would earn a total of 1,621,000 from holding BHI Co or generate 222.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHI Co vs. Phoenix Materials Co
Performance |
| Timeline |
| BHI Co |
| Phoenix Materials |
BHI and Phoenix Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHI and Phoenix Materials
The main advantage of trading using opposite BHI and Phoenix Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHI position performs unexpectedly, Phoenix Materials can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Phoenix Materials will offset losses from the drop in Phoenix Materials' long position.| BHI vs. Jeju Air Co | BHI vs. Golden Bridge Investment | BHI vs. iNtRON Biotechnology | BHI vs. HB Technology TD |
| Phoenix Materials vs. Hanwha Life Insurance | Phoenix Materials vs. InnoTherapy | Phoenix Materials vs. Heungkuk Metaltech CoLtd | Phoenix Materials vs. LG Household Healthcare |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.
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